Gold Up on Weak Dollar, Hopes Fed Will Put Off Rate Increase

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Gold prices rose Monday as the dollar weakened and as some investors wagered the Federal Reserve would stand pat on interest rates at its coming monetary policy-setting meeting.

The most actively traded gold futures contract, for December delivery, was recently up $4.90, or 0.4%, at $1,167.70 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices have been recovering from five-year lows in recent months as some investors wagered that the U.S. central bank would delay raising interest rates till 2016. Fed officials had signaled their willingness to tighten monetary policy, but recent economic data pointed to slower hiring and falling inflation. The data buttressed investor hopes of lower rates for longer, a policy that burnishes gold’s appeal.

On Monday, the dollar weakened against other currencies, further boosting gold prices. The ICE Dollar Index was recently down 0.4% at 96.78. Gold is priced in dollars and becomes less expensive for buyers who use other currencies to buy the precious metal when the buck weakens.

Some traders also scooped up gold ahead of the two-day U.S. Federal Open Market Committee meeting, which starts Tuesday.

“I don’t think the Fed is going to do a darn thing. There’s no question that they’re going to hold, it will be a replay of everything they’ve done before,” said Ira Epstein, a broker with Linn & Associated in Chicago.

“They want to move, but they need inflation and nowhere in the world is inflation showing, other than emerging countries,” Mr. Epstein said.

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